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Global Economy

The ebbs and flows of global economic conditions, trade and capital flows, thus have substantial implications for the Australian economy, and Australia’s major regional trading partners. Understanding the broad trends, and identifying emerging challenges and opportunities within the global economy, is central to the work of the International Economy Program at the Lowy Institute.

The highly integrated nature of the modern global economy became especially evident during the 2008 global financial crisis. What began as a localised problem within the residential asset-backed securities market in the United States, eventually brought down major financial firms across the Western world, and ultimately pushed the United States and Europe into a deep and prolonged recession. Although global economic growth has recovered somewhat since 2008, it is still much lower than pre-2008 trends, and the hangover from the crisis has manifested itself in the form of high unemployment levels throughout much of the developed and developing world, as well as an increasing level of inequality both within and between countries.

Understanding the economic rise of Asia, and particularly of the growing middle class within Asia, is also crucial to the broader work of the Lowy Institute. Political economy analysis on major players in the region, chiefly China, India and Indonesia, features heavily in the work of the East Asia Program and the International Security Program.  

Missing in action: The G20 in the Covid crisis

As the Covid-19 pandemic deepens, the need for international cooperation to deal with the twin health and economic crises has been highlighted. While much is made of the failings of the World Health Organization, other international bodies have fared no better. In particular, the G20 – which

The complex consequences of a plunging oil price

Oil made headlines around the world again today, with US oil prices falling below zero for the first time. So what does it mean? Three perspectives can help to make sense of the headlines. First, from an economic perspective it’s quite simple – the supply of oil has outstripped demand and

We’re all socialists now

Of all the people who might have been expected to emerge from the current coronavirus crisis with their reputations enhanced, I don’t think many would have nominated Karl Marx. And yet when governments around the world are adopting unimaginably radical solutions to address yet another “crisis

After coronavirus: Where the world economy will stand

For all the drama of collapsing output, demand, and jobs in Australia and many economies around the globe, we should expect that output in most countries will begin to recover once new coronavirus infections peak and head down. It will not be soon, but it will happen. This is, after all, a

What the G20 needs to deliver

The Covid-19 outbreak has rapidly gone from a crisis for China to a crisis for the world. The pandemic is desperately crying out for international leadership. So far that has been sorely missing. An extraordinary (virtual) meeting of G20 leaders, to be held on Thursday, will hopefully begin

The IMF ponders international capital flows

The International Monetary Fund is like a priesthood, with long-established beliefs that evolve at a glacial pace. A new managing director presents a rare opportunity for reform. Can Kristalina Georgieva, appointed last October, change the Fund’s doctrinal beliefs? Writing in the Financial Times

Brexit and the Pacific: Sink or swim?

After 47 years of a chaotic marriage, and more than three years of debates and negotiations that have cost two prime ministers, the United Kingdom has finally separated from the European Union. The current conversations on the global consequences of this rupture have largely ignored the Pacific,

Pacific development outlook for 2020

At the dawn of 2020, the world is waking up on a pillow of uncertainty. The trade war between the United States and China has weakened the global economy, instabilities in the Middle East, Asia, and Latin America intensify public anxiety, and the impact of climate change is becoming ever more

US-China trade deal, phase one done: Now what?

It may go awry between now and the promised finalisation in January, but both the US and China now agree that phase one of the most difficult bilateral economic negotiation in recent decades is over. Unusually for this negotiation, the two sides also seem to agree on what they have agreed – at

Murder on the Multilateral Express

Within 24 hours, the Appellate Body of the Word Trade Organisation will cease to function. Designed with seven members, the Appellate Body has seen its membership dwindling over the past three years, with the current headcount at three, the bare minimum necessary to form the quorum for a division

Book review: China, the US, and the big break

Book review: Paul Blustein: Schism: China, America, and the Fracturing of the Global Trading System (CIGI Press, 2019) Paul Blustein has produced an enviable bookshelf of behind-the-scenes reportage on international economic institutions, both as a journalist (for The Washington Post and The

Trade war: From a phase one deal to perpetual peace

After a roller-coaster ride spanning 18 months, the trade war between the United States and China is finally showing signs of abatement, with the two sides confirming that they are close to the conclusion of a phase-one deal. While the signing of the deal, which was originally scheduled to take

India’s RCEP exit a setback, but not a disaster

India’s decision to withdraw from the Regional Comprehensive Economic Partnership (RCEP) agreement has been framed as a catastrophe. Coming at a time of growing rivalries among the major global powers, most analysts have argued it augurs poorly for political cooperation and economic integration in

China, a low-productivity superpower

In the space of just a few decades, China has risen to the rank of a world power, and certainly an Asian regional power. And now China and the US have locked horns in a great-power struggle over trade, foreign investment, intellectual property, technology-transfer policies, industrial policy, cyber

Are free trade deals expanding a digital divide?

E-bills, e-signature, the electronic transfer of funds – advancements in technology are bringing about remarkable changes in the business landscape, domestically and internationally. All this change is facilitating the faster movement of goods across borders and forcing governments to keep pace.

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